water utilities

Lessons from a recent case study on informal settlements in Kampala, Uganda, where water services were expanded to reach the poor in less than a decade, indicate that pro-poor policies are critical to increasing water coverage for poor people. What is telling is that revenues and subsidies earned from serving the non-poor, combined with applying rigorous business principles, were equally important in sustaining these services.

In the case of Kampala, the utility improved its financial viability by more than doubling the number of connections from 59,000 in 2004 to 146,000 in 2009 and tripling revenues between 2004 and 2010. As a result of the policy, an additional 2,500 yard taps and 660 new public points were installed in the informal settlements. Although this was a small fraction of total new connections in the period, since they were shared, they reached 21% of the approximately 466,000 new people served during this period, those in the lowest socio-economic quintiles.

Looking at the financial status of your water utility, would you classify it as a struggling service provider, a developing utility, or a performing service provider? And then, once you decide where it falls on the financial sustainability ladder, what are the best actions to move it up?

At the World Water Forum in Marseille, I participated in a session on innovative ways to finance water for the poor. Most of the ideas proposed were good, including testing Output-Based Aid, improvements to the water tariff structure, and a sanitation fee on the water bill.Then the organizers asked for ideas and the discussion was opened for plenary...